Suit settlement boosts Cybercash shares
By Bloomberg News
Special to CNET News.com
April 6, 1999, 4:05 p.m. PT
CyberCash shares rose 9 percent after the provider of electronic payment services won approval of a settlement ending a shareholder's lawsuit over its adoption of a controversial anti- takeover defense.
Reston, Virginia-based CyberCash's shares rose 1.1875 to 14.625 in trading of more than a million shares after a Delaware judge approved separate settlements under which Cybercash and WinStar Communications, a wireless local phone service provider, agreed to drop their so-called "dead-hand'' poison pill defenses.
"I'm satisfied the settlements are reasonable and fair and in the best interests of the companies and their shareholders,'' said Chancery Court chief judge William Chandler III.
As part of the settlement, Cybercash and WinStar officials agreed to pay as much as $230,000 in legal fees to end suits brought by disgruntled shareholders of each company. They join at least 15 other companies that have dropped the defense in the wake of court rulings casting doubt on the validity of the anti- takeover strategy.
The settlement resulted from suits filed by CyberCash shareholder Matthew Lubrano and WinStar stockholder Walter Hoffman in Delaware Chancery Court, challenging the companies' use of the dead-hand poison pills.
Poison pills make takeovers prohibitively expensive by allowing existing shareholders to buy discounted shares when a hostile bid is made. The dead-hand version of the defense can only be deactivated by the directors who enacted it--even if they are no longer on the board.
Chancery Court judge Jack Jacobs concluded last year that dead-hand pills make proxy fights for control of a company meaningless and unfairly take too much power away from shareholders.
After Jacobs' ruling, companies such as Hilton Hotel Corporation, Texas Instruments, and Intuit voluntarily dropped their dead-hand pills. All are incorporated in Delaware. Lubrano and Hoffman agreed to drop their suits in exchange for an agreement by CyberCash and WinStar to abandon their dead- hand pills and pick up the tab for their legal expenses.
CyberCash is a Reston, Virginia-based startup whose service allows Internet users to pay bills over the Web via credit card or electronic check.
It's using $5 million raised through a recent stock offering to bankroll its new InstaBuy one-click shopping service, officials said today. The software is designed to provide security to Internet shoppers.
New York-based WinStar provides wireless local and long- distance phone service in 30 U.S. cities, as well as high-speed data, Internet access and information services.
Copyright 1999, Bloomberg L.P. All Rights Reserved.
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